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IntegratedBusinessPlanning:FiveStepstoBet...|SCN

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SAPIntegratedBusinessPlanning

IntegratedBusinessPlanning:FiveStepstoBetter
BusinessResults
PostedbyLingaiahVanaminSAPIntegratedBusinessPlanningon06Jun201614:37:05
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What is Integrated Business Planning (IBP), and what does it mean for your business? IBP is the logical
evolution of sales and operations planning (S&OP), an approach that gained popularity in the 1980s as a way
to increase alignment and collaboration throughout the supply chain.
S&OP has done much to enhance the efficiency and profitability of supply chains in virtually every industry.
IBP helps manufacturers and distributors take the next step forward. Rather than enhancing supply chain
processes in isolation, IBP seeks to involve a wide range of stakeholders in every supply chain decision so
that the supply chain can truly drive the success of the entire business.

The 5 stages of Integrated Business Planning

Plan Your IBP Process

IBP is a process led by senior management that evaluates and revises timephased projections for demand,
supply, product, and portfolio changes, strategic projects, and the resulting financial plans. This is done at
the aggregate level on a monthly basis, typically over a 24month or greater rolling planning horizon.
Like every process, IBP has distinct steps. Here are the steps that Demand Solutions considers essential in
the IBP process:

Step 1: Sense
The Sense step is the process of building the demand plan at the local and global company level. Youll seek
to understand, or sense, how your plants and supply chain will need to respond to demand for your products
and services. Sensing demand is a key step in avoiding both inventory shortages and overstocked items.
Once youve developed a demand plan, youll want to be sure that the plan is being fulfilled at least at the
departmental level of your organization. Your demand planners or analysts will then review your forecast
against customer service levels and inventory levels at the beginning of each month. This will help your
decisionmakers sense challenges from more angles so that you can update your forecast accordingly.

Step 2: Shape
The Shape step is the process of building a forwardlooking aggregated and optimized demand and supply
plan at the local and global level. In this step, youll optimize demand with supply, identifying gaps and
analyzing alternatives for addressing mismatchesbefore they affect the customer. Youll focus on building
a strategic demand plan at the family or subfamily level of your product line, aiming for at least 1824
months of future visibility. By the end of the Shape step, your optimized demand and supply plan will be
complete.

Step 3: Collaborate
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Step 3: Collaborate
During the Collaborate step, youll build strong alignment between your local, regional, and global teams,
including the customer and suppliers. Your demand plans and supply forecasts can both be improved through
active collaboration with your key stakeholdersacross your enterprise and beyond. This collaboration
should include the sales organization, trading partners, suppliers, and customers.
Technology is the collaboration enabler. Many leading firms are already using social media to enhance
collaborationand the trend will only ramp up in the future. In the Collaborate phase, youll establish
departmental coordination as well as ongoing collaboration outside the four walls of your company.

Step 4: Integrate
The Integrate step is the process bringing together all executives and stakeholders to approve the optimized
demand, supply, and financial plans. Dont forget: IBP requires buyin across the organization as well as the
extended supply chain. At this point, theres a single view of the truth. Everyone in the extended supply
chain is operating with the same numbers and the same assumptions.
Dont underestimate the challenge of integration. While its true that automated workflow and other
technologies can help, integration requires process discipline. At the end of the Integrate step, youll end
up with a single, optimized planand your financial plans will factor into all your supply chain management
decisions.

Step 5: Orchestrate
The Orchestrate step is the process of publishing the integrated plan and adapting to the changes in the
business, thus allowing for continuous improvement. Its here we see that building the plan isnt enough.
Organizations are systems of people and interrelated functions and processes. You must operationalize and
disseminate the IBP plan across your extended supply chain to optimize the flow of materials in ways that
fulfill demand.
Leveraging a single, integrated IBP platform can dramatically simplify your orchestration process. By the
end of the Orchestrate step, you will have achieved global cooperation with all your trading partners. Youll
have a responsive supply chain that meets sudden and shortterm fluctuations in demand.

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Categories:Implementation,IBPforsalesandoperations,IBPcrosstopic,IBPfordemand,IBPforinventory,SupplyChain
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